Describe about the Commercial Law for the Law of Agreement.
Explain the elements to the formation of contract
Issue: The issue in this question is if a valid contract has been created between Ben and Alan.
Law: According to the law of contract, a contract is an agreement that is concluded between the parties and they can be enforced by the courts. However, a contract becomes enforceable by the law only if certain elements are present in the agreement. As a result, the presence of these elements is a basic requirement of a valid contract. First of all, it is required that there should be a meeting of the minds between the parties. For this purpose, one particular agreement makes an offer to the other party and the other party accepts the offer. In the same way, the elements of consideration, intention to create a really enforceable agreement, capacity to create a valid contract and the free consent of the parties is also required for a valid contract.
For the purpose of making a contract that is enforced by the courts or in other words a valid contract, the first requirement is that one party to the agreement should make an offer. There is a difference between offer and a mere invitation to treat. When the other party accepts the offer, it results in a contract. In this context, it has to be mentioned that the offer can be accepted only by the party to whom it was made. Another requirement is that a valid consideration should be present in a contract. In this regard, the law contract provides that he does not necessary that adequate consideration to be present. It is required that only a valid consideration should be present for the purpose of supporting the promise that has been made by the parties. Another element that is required for a valid contract is that the parties should also have the intention of entering a legal relationship. Therefore, as a result of this requirement, differences present between a friendly or domestic promise made by the parties and a promise that can be enforced by the courts (Parwani, 2004). A promise made by a person to go to dinner will not be considered as being enforceable by the courts if the parties did not have the intention of entering a legal relationship. It is also required that the parties should have the legal capacity to create a binding contract. For example, the parties should have attained the legal age that is required for the creation of a legally enforceable agreement. On the other hand, minors are not allowed to create a valid agreement. Similarly, the parties should not be debarred by the law from creating such a contract. In this regard him as he needs to be noted that certain categories of persons like the persons of unsound mind, bankrupts etc. do not have the capacity to create a legally enforceable agreement. Similarly the law provides that a contract created by a minor cannot be imposed against the minor. At the same time, it is also required that we can send should be provided by the parties for creating an agreement that can be enforced by the law. Therefore the consent of the parties should not be initiated by elements like force or fraud.
Application: In this case all the elements that are required for making a valid contract are present. The parties have made an offer to purchase the bottles of vodka and Ben had accepted the offer. A valid consideration has been paid to support the promise made by the parties and in the same way, Ben and Alan had the intention of entering into a legal relationship as the promises made by them were not made in context of family
Conclusion: It can be said that a valid contract has been created between Ben and Alan.
In this part of the assignment, it has to be considered if Ben has breached any provision of the Sale of Goods Act (SGA). The reason is that in this case, Ben had particularly told that the bottles of vodka being sold by him were tested in Russia however Alan later on discovered that elicit vodka was present in the two bottles. Such a situation is covered by the provisions of SGA. For example, section 13 of the Act provides in this regard that when the goods have been sold by prescription, there is an implied condition applicable in such a case which requires that the goods should match with the description (Kinzie, 2002). Therefore, even in case the goods have been inspected by the buyer, due to the applicability of this section, an implied condition requires that the goods should match the description. However in this context, it has to be mentioned that in every case of a contract related to the sale of goods in which descriptive words have been used cannot be considered as a contract for the sale of goods by description. The result is that these provisions will not apply if in a case, the defendant is successful in establishing that the fire had not relied on the description provided by the seller at the time of making the purchase.
Another relevant provision in this regard is section 14(2)(b) according to which, as a result of certain factors, the goods sold by the seller may be considered as unsatisfactory. Some of these factors are the finish and the appearance of the goods, freedom from minor defects, durability and the safety of the products. At this point, it also needs to be mentioned that in this regard, certain conditions can be implied, mentioned under section 13, 14 and 15 that respectively deal with description, satisfactory quality and the requirement of the fitness for purpose. It is also worth mentioning that these implied conditions cannot be excluded or restricted against the consumer (Drew and Napier 2008). On the other hand, if such a person is not dealing as a consumer, it is possible to exclude or restrict the operation of these sections by using a particular term in the contract although in this case it is required that such term of the contract should fulfill the requirement of reasonableness. Therefore in such a case, an implied term is present, as mentioned in section 14(2)(b) which provides that the goods are required to be of satisfactory quality. In this context, it also needs to be stated that the provisions of this section has made durability as an aspect of satisfactory quality. At the same time, the common law provides that in a contract for sale of goods, a similar term can be implied along with another dimension according to which the goods should satisfy the contractual specification after they have been delivered. The law provides that the sellers have strictly complied with the implied conditions. For example, it was seen in Arcos Ltd v E A Ronaasen & Son (1933) that this principle is strictly applied by the courts. In this case, it was mentioned by the court that a breach of implied condition has taken place as the wooden staves that were delivered by the defendant measured 9/16 of an inch while under the contract, they should have the thickness of half an inch. The court arrived at this conclusion although as a result of this breach, there would not be any effect on the intended use of these states by the defendant was going to make barrels.
In this case, in the contract concluded between Ben and Alan, the above-mentioned implied conditions are applicable. While selling the vodka, Ben had told Alan that the vodka was manufactured in Russia. However, in reality, it was illicit vodka distilled in Australia. Therefore, it can be said that in this case the implied condition of satisfactory quality has been breached and at the same time, the goods did not match the description that was given by Ben at the time of selling the vodka.
Q3. Discuss the validity and enforceability of the statement printed on the receipt.
The facts that have been mentioned in this assignment result in the issue if the statement that was present on the back of the receipt can be treated as valid and enforceable. In this statement, it has been mentioned that the goods will not be refunded and similarly, the responsibility of the seller has been excluded regarding the safety of the goods. As a result of this issue, and is part, it has to be considered if this exemption clause can be considered as valid and enforceable or not (Chandran, 2004). Before proceeding further, it has to be mentioned that an exclusion clause can be described as a contractual term that has been included in the contract or other document for colluding or restricting the liability of one of the parties. In this regard, it has been provided by the law that an exclusion clause can be valid and under certain circumstances, a party may rely on such a clause. However for this purpose, there are certain conditions that apply in such a case. For example, first of all it is required that exclusion clause be valid. This requires that the exclusion clause mentioned in the contract should be valid under the provisions of Unfair Contract Terms Act. The relevant provision in this regard is section 2 of the Act which provides that a term that has been mentioned in a contract or a notice cannot be used for excluding the liability of a party to the contract for negligence that has resulted in death or causing personal injury to the other party. However, the law allows a party to rely on an exclusion clause for excluding or restricting its liability in case of a loss or damage that has not resulted in death or personal injury to the other party (Ramsay, 2007). In the same way, section 3 of this legislation provides that dealing with business entities, where the customers have entered the transaction by using the standard form, the provisions mentioned in this section will apply. In the same way, the Act provides in section 5 that the manufacturers and retailers cannot use an exclusion clause or a notice for excluding or restricting their liability that may arise due to a defect in the product or on account of their negligence.
Similarly, a party can rely upon such a clause for excluding its liability only if the clause has been properly incorporated in the contract. In this case, an exclusion clause can be treated as properly incorporated if such clause has been brought to the notice of the other party (Gasaway, 2002).
In the present case, when Ben and Alan created the contract, a receipt was given to Alan and on the back of this receipt, an exclusion clause has been mentioned. Ben had not mentioned the presence of this clause while entering the contract. Under these circumstances, it can be said that the clause was not properly incorporated. As a result, this clause cannot be used by Ben for the purpose of excluding his liability.
Q4. Can Alan’s friends pursue liability with Ben under contract? Otherwise, suggest an appropriate cause of action
In case of Singapore, the general principles of tort law need to be applied when a case involving product liability claim arises. In this regard, the legal principles that were mentioned by the court in Donoghue v Stevenson (1932) are still applicable even though the decision came many years ago. This case was also related to product liability and the court had discussed the basic liability of the manufacturers regarding their products. After going through the evidence, the court arrived at inclusion in this case that when the manufacturers are selling the product in a form, which will reach the ultimate consumers in the same form in which it has left the manufacture and no reasonable possibility is present regarding an intermediate examination, and at the same time, the manufacturer also knows that in the absence of reasonable care at the time of preparing the product, the ultimate consumer may suffer an injury, it is said that the manufacture owed a duty of care. This duty of care is present even if the product has not been purchased by the ultimate consumer.
In this case also, Alan’s friends have not purchased the bottles of vodka and as a result, there was no contract between them and the seller of the product, Ben. However, in view of the above-mentioned principles related with the liability of the manufacturers, the manufacturer or the supplier of goods have a liability towards the ultimate consumers even if they have not purchased a product themselves. Therefore it can be said that Alan’s friends have a claim against Ben even if no contract was present between them.
References
Chandran, R. (2004) Consumer Protection (Fair Trading) Act. Singapore Journal of Legal Studies, pp.192-226
Drew & Napier LLC. (2008) Legislation Update: Consumer Protection (Fair Trading) (Amendment) Bill. Available from: https://www.drewnapier.com/pdf/30July2008_Update.pdf
Gasaway, R. 2002. “The Problem of Tort Reform: Federalism and the Regulation of Lawyers.” Harvard Journal of Law and Public Policy 25
Kinzie, Mark A. 2002. Product Liability Litigation, Albany, N.Y.: West/Thomson Learning.
Parwani 2004, Legal Update: An Overview of the Consumer Protection (Fair Trading) Act 2004. Available from: https://www.anplaw.com/LE03-04.pdf
Ramsay, I. (2007) Consumer law and policy : text and materials on regulating consumer markets. 2nd ed. Oxford, Hart Publishing
Case Law
Arcos Ltd v E A Ronaasen & Son ([1933] KB 470
Donoghue v Stevenson (1932) AC 562
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